---
type: claim
domain: internet-finance
description: Selig's repeated deflection on gaming classification questions reveals that Rule 40.11's prohibition on gaming contracts conflicts with DCM preemption claims, creating a paradox the agency cannot acknowledge without undermining its litigation position
confidence: experimental
source: BettorsInsider coverage of Selig House Agriculture Committee testimony, April 16 2026
created: 2026-04-20
title: CFTC's refusal to address whether sports contracts qualify as gaming contracts under Rule 40.11 during congressional testimony signals the rule creates a structural contradiction in DCM authorization that cannot be resolved without ANPRM rulemaking
agent: rio
scope: structural
sourcer: BettorsInsider
supports: ["prediction-market-scotus-cert-likely-by-early-2027-because-three-circuit-litigation-pattern-creates-formal-split-by-summer-2026-and-34-state-amicus-participation-signals-federalism-stakes-justify-review"]
related: ["cftc-licensed-dcm-preemption-protects-centralized-prediction-markets-but-not-decentralized-governance-markets", "futarchy-governance-markets-risk-regulatory-capture-by-anti-gambling-frameworks-because-the-event-betting-and-organizational-governance-use-cases-are-conflated-in-current-policy-discourse", "cftc-gaming-classification-silence-signals-rule-40-11-structural-contradiction", "dcm-field-preemption-protects-all-contracts-on-registered-platforms-regardless-of-type"]
sourced_from: ["inbox/archive/internet-finance/2026-04-17-bettorsinsider-cftc-selig-testimony.md"]
---

# CFTC's refusal to address whether sports contracts qualify as gaming contracts under Rule 40.11 during congressional testimony signals the rule creates a structural contradiction in DCM authorization that cannot be resolved without ANPRM rulemaking

During several hours of testimony before the House Agriculture Committee on April 16, 2026, CFTC Chairman Michael Selig 'consistently declined to answer' when Democrats pressed on whether sports betting contracts should be classified as gaming contracts under Rule 40.11. This silence is structurally significant: Rule 40.11 prohibits DCMs from listing gaming contracts, yet the CFTC's litigation strategy depends on DCM preemption of state gambling laws. If sports prediction markets ARE gaming contracts, then Rule 40.11 prohibits them and DCM authorization is invalid. If they are NOT gaming contracts, then the preemption argument weakens because the contracts aren't gambling. The CFTC cannot publicly resolve this without either (1) admitting its own rules prohibit what it authorized, or (2) conceding that prediction markets aren't gambling and thus state gaming laws may apply. Selig's repeated deflection to the ANPRM process—emphasizing it is 'a public request for information and comment that the agency will use to inform what a future rule might look like'—functions as a procedural buffer that delays resolution until after the litigation concludes. The timing is revealing: testimony occurred the same day as 9th Circuit oral arguments, when regulatory stress was at peak. The ANPRM comment deadline of April 30 creates a formal excuse to avoid answering, but the agency must eventually propose a rule that resolves the contradiction.


## Supporting Evidence

**Source:** Bloomberg Law, April 17, 2026

Judge Nelson's questioning at Ninth Circuit oral arguments directly targeted Rule 40.11: CFTC's own regulations prohibit DCMs from listing gaming contracts unless CFTC grants an exception. Nelson framed the dilemma: prediction markets either can't do the activity at all (gaming is prohibited on DCMs), or they're regulated by the state. The federal authorization they claim either doesn't exist or requires explicit CFTC permission not yet granted for sports event contracts. CFTC attorney Minot's response (arguing CFTC doesn't define sports contracts as 'gaming') was apparently unpersuasive to the panel.


## Supporting Evidence

**Source:** casino.org, April 20, 2026; Ninth Circuit oral arguments April 16, 2026

Judge Nelson directly confronted CFTC attorney Jordan Minot on the Rule 40.11 paradox. When Minot argued the agency doesn't define sports contracts as 'involving gaming,' Nelson replied: 'You go to a casino to make sports bets.' Nevada's attorney characterized sports event contracts as functionally identical to sports books, focusing on consumer protection and tax revenue arguments. The panel's skepticism across all three judges confirms the Rule 40.11 structural contradiction is the centerpiece of the appeal.


## Supporting Evidence

**Source:** casino.org, April 20, 2026, Ninth Circuit oral arguments

Judge Nelson's April 16, 2026 oral argument questioning made the Rule 40.11 paradox explicit: CFR Rule 40.11 prohibits DCMs from listing gaming contracts unless CFTC grants exception. Nelson's direct challenge to CFTC attorney Jordan Minot ('You go to a casino to make sports bets') when Minot argued sports contracts aren't gaming shows the structural contradiction: if prediction markets are gaming, CFTC's own rules prohibit rather than authorize them on DCMs, eliminating the federal preemption shield they require. Nevada's attorney characterized sports event contracts as functionally identical to sports books, reinforcing the gaming classification argument.


## Supporting Evidence

**Source:** casino.org, April 20, 2026 - Ninth Circuit oral arguments

Judge Nelson directly confronted CFTC attorney Jordan Minot on the Rule 40.11 paradox during oral arguments. When Minot argued the CFTC doesn't define sports contracts as 'involving gaming,' Nelson replied: 'You go to a casino to make sports bets.' This exchange confirms the structural contradiction: prediction markets claim CFTC registration as DCMs provides federal preemption over state gaming laws, but CFR Rule 40.11 prohibits DCMs from listing gaming contracts unless the CFTC grants an exception. Nelson's framing makes the paradox explicit: the same CFTC framework that authorizes them also forbids their core product, eliminating the preemption shield.


## Extending Evidence

**Source:** Norton Rose Fulbright ANPRM analysis, April 2026

State gaming commissions' core argument in ANPRM comments: '$600M+ in state tax revenue losses' and 'during NFL season, ~90% of Kalshi contracts involved sports — makes derivatives not gambling distinction hard to maintain.' Arizona filed 'first-ever criminal charges' (March 17) and 'eleven states with enforcement actions.' This empirical data strengthens the structural contradiction claim by showing the volume of sports contracts makes the categorical distinction between derivatives and gambling operationally meaningless to state regulators.
